<PAGE>
================================================================================
THE RESERVE FUNDS
Reserve Institutional Trust:
Primary Institutional, U.S. Government Institutional and U.S. Treasury
Institutional and Interstate Tax-Exempt Institutional Funds
Supplement dated August 18, 1999
to the Prospectus dated July 31, 1999
================================================================================
Performance History
The Performance History on page 5 and 6 of the Prospectus contains typographical
errors. The correct figures are as follows:
<TABLE>
<S> <C>
Primary Institutional Fund - Class B U.S. Government Institutional Fund - Class B
Worst Quarter 4th Q 1998 1.25% Most Recent Calendar Quarter 2nd Q 1999 1.07%
Most Recent Calendar Quarter 2nd Q 1999 1.10%
</TABLE>
Average Annual Total Returns as of December 31, 1998
<TABLE>
<CAPTION>
Since
1 Year Inception
------ ---------
<S> <C> <C>
Primary Institutional Fund--Class A................................. 5.56% 5.57%
Primary Institutional Fund--Treasurer's Trust....................... 5.17 5.18
U.S. Government Institutional Fund--Class A......................... 0.38(1) 4.72*
U.S. Government Institutional Fund--Treasurer's Trust............... 3.17(2) 4.84*
Interstate Tax-Exempt Institutional Fund--Class A................... 0.53(3) 3.11*
Interstate Tax-Exempt Institutional Fund--Class B................... 1.01(4) 2.48*
Interstate Tax-Exempt Institutional Fund--Treasurer's Trust......... 1.96(5) 3.10*
</TABLE>
- --------
(1) For the Period 12/2/98 to 12/31/98.
(2) For the Period 5/5/98 to 12/31/98.
(3) For the Period 11/3/98 to 12/31/98.
(4) For the Period 8/4/98 to 12/31/98.
(5) For the Period 5/13/98 to 12/31/98.
* Annualized.
<PAGE>
================================================================================
THE RESERVE FUNDS
Reserve Institutional Trust:
Treasurer's Trust: Primary Institutional, U.S. Government Institutional and
U.S. Treasury Institutional and Interstate Tax-Exempt Institutional Funds
Supplement dated August 18, 1999
to the Prospectus dated July 31, 1999
================================================================================
The Performance History on page 5 and 6 of the Prospectus contains
typographical errors. The correct figures are as follows:
Primary Institutional Fund - Treasurer's Trust
Best Quarter 1st Q 1998 1.26%
Worst Quarter 4th Q 1998 1.19%
Most Recent Calendar Quarter 2nd Q 1999 1.07%
Average Annual Total Returns as of December 31, 1998
<TABLE>
<CAPTION>
Since
1 Year Inception
------ ---------
<S> <C> <C>
Primary Institutional Fund--Class A...................................... 5.56% 5.57%
Primary Institutional Fund--Class B...................................... 5.33 5.32
U.S. Government Institutional Fund--Class A.............................. 0.38(1) 4.72*
U.S. Government Institutional Fund--Class B.............................. 5.14 5.15*
U.S. Government Institutional Fund--Treasurer's Trust.................... 3.17(2) 4.84*
Interstate Tax-Exempt Institutional Fund--Class A........................ 0.53(3) 3.11*
Interstate Tax-Exempt Institutional Fund--Class B........................ 1.01(4) 2.48*
Interstate Tax-Exempt Institutional Fund--Treasurer's Trust.............. 1.96(5) 3.10*
</TABLE>
- --------
(1) For the Period 12/2/98 to 12/31/98.
(2) For the Period 5/5/98 to 12/31/98.
(3) For the Period 11/3/98 to 12/31/98.
(4) For the Period 8/4/98 to 12/31/98.
(5) For the Period 5/13/98 to 12/31/98.
* Annualized.
